US stock futures are set for a slightly lower open Monday
morning following another week where indices stretched to all-time
highs. The big headline over the weekend was an article in the
Wall Street Journal
from Fed expert Jon Hilsenrath, who suggested the Fed is plotting
its exit strategy from QE. Better than expected retail sales data
this morning, though, has helped to drag S&P futures back to
near the flat line.
Chatter surfaced on Friday afternoon about a potential article
detailing the Fed's plan to wind down QE, and sure enough after the
Wall Street Journal
article was released to allow markets the full weekend to digest
its implications. It appears the Fed, amid a growing storm of
criticism last week from prominent hedge fund investors at both the
Ira Sohn and SALT conferences, is prepping the markets for an end
The gap up from May 3 jobs data helped fuel another week of gains.
(INDEXDJX:.DJI) at 15,000+ and the
(INDEXSP:.INX) hitting north of 1630 it makes some sense for the
Fed to tweak its approach.
The real questions are, how will the market handle the news and how
can we navigate it? World markets are slightly red, but now US
futures are down only marginally. Over the weekend, many were
expecting a volatile reaction to the
Wall Street Journal
article, but so far the market seems undaunted. For the bulls to
lose some momentum, we will need to see a close below 1618-1623 (if
this happens). We could see a move to retest the 1597 area (the
21-day is also here). Pivot resistance stands at 1633-1635.
Rotation is still the key theme. Tech in particular remains very
mixed but has many opportunities.
) had a great additional move since the $803 buyable pivot after
earnings. At this point it's very extended from all moving averages
and the 8-day stands at $857 (which it's been riding this since
) finally woke up a bit after the two-week consolidation since
earnings. Last week $210.50ish was buyable, now the next pivot buy
would be a trade through $219-221 on heavy volume. Make sure it
stays above that level if it does initially push through it.
) is in a very interesting spot. It had a tradable move after
earnings from about $410 to about $465ish. It pulled back last
week. For this stock to stay in the game and continue its
post-earnings strength, holding above $445-447 is important. It
would also make things easier if we can hold above $450.48 today.
The 50-day moving average is all the way at $433, that would be the
last line of defense for the bulls. If we see that this week, some
disbelief about the stock recovery could grow louder.
) got hit after earnings, but only went below its 200-day for a day
or so before popping back above. See if it can stay above $260 now.
) also recovered very nicely after getting hit on earnings. The
chart is repairing but needs time.
(ORCL) is trying to get into its earnings gap. That could be a spot
for a quick trade through $34.03.
(INTC) is hard to chase here, but also trapped some short. Nice
move from $22 pivot.
(MSFT) finally had a pullback. The 8-day caught up, it might need
the 21-day that stands at $32ish.
(FB) still frustrates many. I got stopped out on Friday, and
short-term guys are probably trying to stay away. Longer term guys
should make sure the $25 area holds.
(LNKD) is still in the penalty box since earnings after a monster
run. It feels to me like it needs to see the $165 area.
Many biotechs stocks have been on the move, which we will cover in
the Morning Call video.
(CELG) is best-of-breed in the biotech group as it's trading near
highs after seeing a nice push of 3.3% on Friday. The all-time
highs is $128.52. Holding above Friday's breakout level of $124.10
could help the stock to break above this key level soon.
(BIIB) saw a controlled pullback into its 21-day where it held and
bounced back up on Friday. It also held the prior breakout level of
$209 which is a healthy signal. Look for continuation above $212.93
today as the stock could see a move back to year's highs at
(AMGN) has been building a nice base at $104 where it held multiple
times over the last few weeks. It saw a nice move up on Friday as
it finished with almost 2% of gains which help it to regain the
support of the 8- and 21-day moving averages. The stock closed on
highs signaling potential upside follow-through, so keep an eye on
(GILD) has seen a controlled pullback off its recent high and is
trying to hold support of its short-term moving averages. Above
$53.25 this stock could be back on the move
(ALXN) has been on the radar as a potential breakout above $100.
The stock saw a nice move on Friday as it went as high as $104.14.
Short squeezes have been one of the themes of Q2. Here are some
names in that realm that we continue to watch.
(SODA) triggered our buy price of $56.37. The stock was on our
radar as it saw a nice push on Thursday after reporting
better-than-expected earnings. This stock has 45.2% short interest.
We could see another round of short squeeze as long as it holds
above prior breakout level.
(BBRY) was a frequent mention on the VTF as it traded above $15.15
on Thursday. The stock continues to trade within the upper level
wedge pattern that resolves to the upside above $16. Friday's
action could lead to upside follow-through this week. It could be
one of the latest heavily shorted stocks to squeeze.
Cliffs Natural Resources
(CLF) saw a nice move up on Wednesday and flagged nicely on
Thursday and Friday pointing to higher prices above Friday's high.
We mentioned this stock on Wednesday morning before that breakout,
and the trade is still in motion, so keep an eye on this materials
play as it has a lot of room to the upside. Short percentage of the
float is 24.8%.
(WLT) is another materials stock that saw a nice move off of low on
Wednesday. The stock is currently flagging on top of that wide
range bar. WLT has 15.3% short interest. Above $19.81 we could see
another round of short squeeze.
Casino names have been active.
(MGM) is a bit extended but looks like it could see higher prices
Las Vegas Sands
(LVS) provided a nice entry last week and looks good.
Metals continue to be erratic but weaker.
(NYSEARCA:GLD) is opening lower but has intermediate support at
Inverse 20+ Year Bond ETF
(NYSEARCA:TBT) had a very nice move last week. It ignited on jobs
Friday, and showed commitment all week. A bit of a rest is due. See
if it can hold $62.50ish.
At this point markets have been stair-stepping higher, and each
level has been holding on small intraday pullback. Let's see if
that trend continues or if we have to make some adjustments.
Disclosure: Minyanville Studios, a division of Minyanville
Media, has a business relationship with BlackBerry.